Laing O’Rourke to supply rivals using offsite factory

6th November, 2019

Laing O'Rourke plans to supply other contractors from its £150m offsite construction manufacturing factory, Construction News can reveal.

The company is developing products its rivals could use on projects, primarily in the infrastructure market.

Finance director Stewart McIntyre told Construction News: "We've had talks with other contractors about supplying products and we're creating a product suite to enable us to do that."

Supplying other contractors marks a change in approach for the company, which had previously planned to use the factory, in Worksop, Nottinghamshire, solely for its own needs.

Mr McIntyre made clear, however, that Laing O'Rourke's product needs will take priority.

"We would fundamentally want to deliver our own capacity requirements first," he said.

He did not give any information about models it would use to charge other companies using the facility.

Figures from other contractors, including Osborne CEO Andy Steele, have acknowledged the need for a steady pipeline of work in offsite facilities being a barrier to their more widespread use in the industry.

Laing O'Rourke published its accounts for the year ending 31 March 2019 last week and reported that revenue generated by the offsite factory was £35m. This is the first time the company has revealed its income from the facility.

Mr McIntyre said the company had decided to publish the factory's revenue as it is expected to contribute more to the overall revenue in the coming years.

"The reason we're highlighting that is you're going to see that increasing in time," he said.

"Bearing in mind how transparent we want to be, we want people to be able to see that and track that."

The factory does not yet generate a profit as standalone operation, Mr McIntyre said.

"We're happy with the investment," Mr McIntyre added. "It gives us benefits elsewhere in the business."

Last year the company set up Laing O'Rourke Residential and Mr McIntyre said this is seeing "strong activity" at the moment.

The business is designed to deliver houses using O'Rourke's offsite manufacturing and assembly method.

Mr McIntyre said the company had signed "a couple of" pre-contract services agreements, but did not reveal when the first homes might be delivered.

In 2018 the company signed a deal with developer Stanhope to deliver up to £2bn of new homes by 2023.

Laing O'Rourke made a £32.8m pre-tax profit in its last financial year, its first profitable year since 2015.

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